What is not a Contract?

Contracts are agreements between two parties to exchange
something of value. While that may sound straightforward, certain
situations can make a contract void or unenforceable.

The law does not recognize contracts for illegal acts like
selling narcotics or for immoral acts that are against the law,
such as prostitution. If a contract becomes illegal after it is
made, it becomes unenforceable and any previous payments made must
be returned.

Signing a contract under duress or intimidation, also known as
overreaching, also voids the agreement. Duress is a threat or
intimidation that causes a person to do something against his or
her will. The threat can be physical or it can be economic, where
one party has an unfair advantage over the other and uses it to the
other's detriment. If a person signs a contract under duress, he
should contact an attorney as quickly as possible to determine his
legal rights.

Undue influence occurs when a person uses a trusting
relationship to persuade the other person into an unfair contract.
This ploy most often occurs against people at a disadvantage such
as age, illness, or emotional stability.

Fraud also makes a contract void. Fraud occurs when one party
lies or misrepresents an important part of a contract to the other
party. An example would be a car owner's rolling back the odometer
of a used car and claiming the car has been driven 30,000 miles
rather than the actual 60,000 miles.

However, a fine line exists between fraud and a seller's opinion
of the subject of the contract, known as sales puffing, which does
not void a contract. Determining whether fraud or sales puffing
occurred in contract defense can be difficult and usually has to be
interpreted in court.

Mistakes do happen in negotiating and signing contracts. Some
mistakes can void a contract, while others may not. A buyer's
mistaken impression is not the seller's fault, unless the seller
knows of the false impression and does not correct the information.
The best way to avoid this situation as a buyer is never to assume
anything, but to ask questions.

If both sides of the contract have incorrect information, known
as a mutual mistake, the court will often set aside a contract.The
mistake puts both buyer and seller at a disadvantage and voiding
the contract is in everyone's best interest.

Sometimes situations change after a contract is signed, making
the deal either impossible to perform or unnecessary. Safeguards
exist in these cases for the courts to set aside these
contracts.